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Finance Bill
Schedule 29 — Registered pension schemes: authorised lump sums—supplementary
Part 2 — Lump sum death benefit rule

458

 

TPLS is the total amount of pension protection lump sum death

benefit previously paid in respect of the pension under this

paragraph.

Money purchase arrangements

Uncrystallised funds lump sum death benefit

5

15    (1)  

For the purposes of this Part a lump sum death benefit is an uncrystallised

funds lump sum death benefit if—

(a)   

the member had not reached the age of 75 at the date of the member’s

death,

(b)   

it is paid in respect of a money purchase arrangement,

10

(c)   

it is paid before the end of the period of two years beginning with the

day on which the member died, and

(d)   

it is paid in respect of relevant uncrystallised funds.

      (2)  

“Relevant uncrystallised funds” means such of the sums and assets held for

the purposes of the arrangement at the member’s death as—

15

(a)   

had not been applied for purchasing a scheme pension, a lifetime

annuity, a dependants’ scheme pension or a dependants’ annuity,

and

(b)   

had not been designated under the arrangement as available for the

payment of unsecured pension.

20

      (3)  

But if an amount falling within sub-paragraph (1) exceeds the permitted

maximum, the excess is not an uncrystallised funds lump sum death benefit.

      (4)  

The permitted maximum is the aggregate of—

(a)   

the amount of the sums, and

(b)   

the market value of the assets,

25

           

which constitute the relevant uncrystallised funds immediately before the

payment is made.

Annuity protection lump sum death benefit

16    (1)  

For the purposes of this Part a lump sum death benefit is an annuity

protection lump sum death benefit if—

30

(a)   

the member had not reached the age of 75 at the date of the member’s

death,

(b)   

it is paid in respect of a money purchase arrangement, and

(c)   

it is paid in respect of a scheme pension or lifetime annuity to which

the member was entitled at the date of the member’s death.

35

      (2)  

But if the amount of a lump sum falling within sub-paragraph (1) exceeds

the annuity protection limit, the excess is not an annuity protection lump

sum death benefit.

      (3)  

The annuity protection limit is—equation: plus[times[char[A],char[C]],minus[times[char[A],char[P]]],minus[times[char[T],char[

P],char[L],char[S]]]]

           

where—

40

AC is the amount crystallised by reason of the member becoming

entitled to the pension or annuity (see section 212),

 

 

Finance Bill
Schedule 29 — Registered pension schemes: authorised lump sums—supplementary
Part 2 — Lump sum death benefit rule

459

 

AP is the amount of the pension paid in respect of the period between

the member becoming entitled to the pension or annuity and the

member’s death, and

TPLS is the total amount of annuity protection lump sum death

benefit previously paid in respect of the pension or annuity under

5

this paragraph.

Unsecured pension fund lump sum death benefit

17    (1)  

For the purposes of this Part a lump sum death benefit is an unsecured

pension fund lump sum death benefit if—

(a)   

the member had not reached the age of 75 at the date of the member’s

10

death, and

(b)   

it is paid in respect of income withdrawal to which the member was

entitled under an arrangement at the date of the member’s death.

      (2)  

A lump sum death benefit is also an unsecured pension fund lump sum

death benefit if—

15

(a)   

it is paid on the death of a dependant of the member,

(b)   

the dependant had not reached the age of 75 at the date of the

dependant’s death, and

(c)   

it is paid in respect of dependants’ income withdrawal to which the

dependant was entitled at the date of the dependant’s death in

20

respect of an arrangement relating to the member.

      (3)  

But if the amount of a lump sum falling within sub-paragraph (1) or (2)

exceeds the permitted maximum, the excess is not an unsecured pension

fund lump sum death benefit.

      (4)  

The permitted maximum is the aggregate of—

25

(a)   

the amount of the sums, and

(b)   

the market value of the assets,

           

representing the member’s or dependant’s unsecured pension fund in

respect of the arrangement immediately before the payment is made.

Charity lump sum death benefit

30

18    (1)  

A lump sum death benefit is a charity lump sum death benefit if—

(a)   

the member had reached the age of 75 at the date of the member’s

death,

(b)   

there are no dependants of the member,

(c)   

it is paid in respect of income withdrawal to which the member was

35

entitled in respect of an arrangement at the date of the member’s

death, and

(d)   

it is paid to a charity nominated by the member.

      (2)  

A lump sum death benefit is also a charity lump sum death benefit if—

(a)   

it is paid on the death of a dependant of the member,

40

(b)   

the dependant had reached the age of 75 at the date of the

dependant’s death,

(c)   

there are no other dependants of the member,

(d)   

it is paid in respect of dependants’ income withdrawal to which the

dependant was entitled at the date of the dependant’s death in

45

respect of an arrangement relating to the member, and

 

 

Finance Bill
Schedule 29 — Registered pension schemes: authorised lump sums—supplementary
Part 2 — Lump sum death benefit rule

460

 

(e)   

it is paid to a charity nominated by the member (or, if the member

made no nomination, by the dependant).

      (3)  

But if the amount of a lump sum falling within sub-paragraph (1) or (2)

exceeds the permitted maximum, the amount of the excess is not a charity

lump sum death benefit.

5

      (4)  

The permitted maximum is the aggregate of—

(a)   

the amount of the sums, and

(b)   

the market value of the assets,

           

representing the member’s or dependant’s alternatively secured pension

fund in respect of the arrangement immediately before the payment is made.

10

Transfer lump sum death benefit

19    (1)  

For the purposes of this Part a lump sum death benefit is a transfer lump

sum death benefit if—

(a)   

the member had reached the age of 75 at the date of the member’s

death,

15

(b)   

there are no dependants of the member,

(c)   

it is paid in respect of income withdrawal to which the member was

entitled in respect of an arrangement at the date of the member’s

death, and

(d)   

it is paid so as to become held for the purposes of, or to represent

20

accrued rights under, arrangements under the pension scheme

relating to one or more members of the pension scheme nominated

by the deceased member (or if the member made no nomination,

selected by the scheme administrator).

      (2)  

A lump sum death benefit is also a transfer lump sum death benefit if—

25

(a)   

it is paid on the death of a dependant of the member,

(b)   

the dependant had reached the age of 75 at the date of the

dependant’s death,

(c)   

there are no other dependants of the member,

(d)   

it is paid in respect of dependants’ income withdrawal to which at

30

the date of the dependant’s death the dependant was entitled in

respect of an arrangement relating to the member under the pension

scheme, and

(e)   

it is paid so as to become held for the purposes of, or to represent

accrued rights under, arrangements under the pension scheme

35

relating to one or more members of the pension scheme nominated

by the relevant person (or if the relevant person made no

nomination, selected by the scheme administrator).

      (3)  

The relevant person is the member or, if no nomination is made by the

member, the dependant.

40

      (4)  

But if the amount of a lump sum falling within sub-paragraph (1) or (2)

exceeds the permitted maximum, the amount of the excess is not a transfer

lump sum death benefit.

      (5)  

The permitted maximum is the aggregate of—

(a)   

the amount of the sums, and

45

(b)   

the market value of the assets,

           

representing the member’s or dependant’s alternatively secured pension

fund in respect of the arrangement immediately before the payment is made.

 

 

Finance Bill
Schedule 29 — Registered pension schemes: authorised lump sums—supplementary
Part 2 — Lump sum death benefit rule

461

 

Defined benefits and money purchase arrangements

Trivial commutation lump sum death benefit

20    (1)  

A lump sum death benefit is a trivial commutation lump sum death benefit

if—

(a)   

the member had not reached the age of 75 at the date of the member’s

5

death,

(b)   

it is paid to a dependant entitled under the pension scheme to

pension death benefit in respect of the member,

(c)   

it is paid before the day on which the member would have reached

the age of 75, and

10

(d)   

it extinguishes the dependant’s entitlement under the pension

scheme to pension death benefit and lump sum death benefit in

respect of the member.

      (2)  

But if the amount of a lump sum falling within sub-paragraph (1) exceeds

1% of the standard lifetime allowance on the date the lump sum is paid, the

15

excess is not a trivial commutation lump sum death benefit.

Winding-up lump sum death benefit

21    (1)  

A lump sum death benefit is a winding-up lump sum death benefit if—

(a)   

the pension scheme is being wound-up,

(b)   

it is paid to a dependant entitled under the pension scheme to

20

pension death benefit in respect of the member, and

(c)   

it extinguishes the dependant’s entitlement under the pension

scheme to pension death benefit and lump sum death benefit in

respect of the member.

      (2)  

But if the amount of a lump sum falling within sub-paragraph (1) exceeds

25

1% of the standard lifetime allowance on the date the lump sum is paid, the

excess is not a winding-up lump sum death benefit.

Interpretation

Interpretation of Part 2

22    (1)  

Expressions used in this Part of this Schedule and in Schedule 28 have the

30

same meaning in this Part of this Schedule as in Schedule 28.

      (2)  

Where by virtue of paragraph 14(2), 20(2) or 21(2) an excess is not an

authorised lump sum death benefit of one description, that does not prevent

the excess being an authorised lump sum death benefit of another

description.

35

      (3)  

“Authorised lump sum death benefit” means a lump sum death benefit

authorised to be paid by the lump sum death benefit rule.

 

 

 
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